As the booming US economy generates budget surpluses which may eliminate the national debt by 2015, the political arguments over a tax-cutting bonanza are also gaining momentum.

The danger of the economy overheating and driving up inflation, however, is expected to force the Federal Reserve to announce an interest rates rise today.

The buying spree by American consumers, and stock market gains, have boosted tax revenues so much this year that the US government has had to revise upwards its already rosy predictions of budget surpluses over the next decade and beyond.

President Clinton has announced that the accumulated federal budget surplus will be $1 trillion (€968 billion) higher over the next 15 years than was estimated recently. For the fiscal year ending September 30th, the surplus will be $99 billion instead of the estimated $79 billion.

Announcing the good news in the White House Rose Garden, Mr Clinton said the Federal debt of $3.6 trillion now held by investors at home and abroad should be cancelled by 2015. "We have now cut up Washington's credit card. Now we can pay off the debt," he said.

This part of the national debt does not include the $2.1 trillion in the social security trust fund to which US workers contribute to pay for their pensions. Up to now the administration includes the social security surplus on the revenue side of the budget but the President has now promised to insulate these funds in a "lock box" to ensure there will be enough to pay retirement pensions until at least 2053.

As the national debt disappears, the savings in interest payments will be reinvested into the social security fund to ensure the "baby boomer" generation will not inherit a bankrupt situation as was predicted last year.

But the economy is growing at such a rate that even without these social security funds to dip into, there will be increasing budget surpluses for the forseeable future. Next year will be the first time in 40 years that there will be a surplus excluding the receipts from social security.

The prospects of so much unspent revenue sloshing around the Treasury has inevitably heightened the arguments between Mr Clinton and his Republican opponents over whether to spend more on education and benefits for the poor or on tax cuts which would also benefit the rich. The Republicans already have plans for $775 billion in tax cuts over the next decade.

One thing Mr Clinton, Democrats and Republicans agree on is to devote enough of the surplus to preserve the Medicare system which provides health benefits for the aged. The President yesterday announced extending Medicare to cover more drug costs but he had to drop a proposal to make it means-tested so that the rich would pay more.

The present plan is to devote $794 billion of the additional surpluses over the next 15 years to Medicare to ensure it remains solvent beyond 2025. Agreement on this in Congress would remove a major cause of the disagreement between the majority Republicans and the Democrats. Republicans wanted to slow the increase in Medicare spending to pay for tax cuts but this allowed Mr Clinton in his 1996 election campaign to accuse them of "cutting" medical benefits for the elderly and helped him to crush Senator Bob Dole's challenge.

With the solvency of Medicare and social security now apparently assured well into the next century, Mr Clinton is more likely to go along with Republican calls for broader tax cuts. But he insists the priority must be for education and social programmes to help the lower-paid.

As Republicans see it, there should be enough for everyone.